Under Pressure, Insurer Agrees to Fully Cover Vaccine

Despite months of complaints from doctors, Blue Cross Blue Shield of Texas would not fully cover the costs for the infant vaccine Prevnar 13, which prevents deadly cases of bacterial pneumonia and meningitis. The company paid for the medicine but denied doctors their overhead costs, meaning physicians lost roughly $20 on every dose.

The company reversed that policy on Monday, announcing it will now cover all costs associated with the vaccine — a practice already followed by all major health insurance companies in the state. BCBS officials issued a statement the same day The Texas Tribune asked them about the reimbursement gap, saying they would raise the reimbursement by $20 effective July 23. They explained the adjustment delay by saying they had been working diligently on a pricing review.

The company “recognizes the value of immunizations and understands the concerns of doctors in our network,” Dr. Jerald L. Zarin, the company’s regional medical director, said in a written statement. "After discussions with physician groups and further review of the pricing strategy for the new vaccine, Blue Cross and Blue Shield of Texas has increased its physician reimbursement pricing on this drug.”

Keller pediatrician Dr. Jason Terk called the decision purely political and said it’s no coincidence it came the same day a reporter asked the insurance provider about it. “They’re not considering the welfare of children,” Terk said. “They’ve made the political calculation that publicity is going to be more of a negative thing for them.”

Prevnar 13, an inoculation for pneumococcal disease, protects against nearly twice as many strains as the original vaccine, Prevnar 7. It is administered in a series of four doses over 18 months. Some doctors have been refusing to give the vaccine to BCBS patients, referring them instead to public health clinics. Others were so angry about the reimbursement gap that they were threatening to cancel their contracts with the insurance provider out of principle, a Texas Pediatrics Society spokeswoman said.

“It’s been a financial loss each time,” said Terk, who has continued to offer the vaccine to BCBS patients for ethical reasons but sympathizes with doctors who couldn’t afford to. “We were looking at a situation where the health of our most vulnerable Texans was put at risk because of this arbitrary pricing policy.”

Physician groups, which say they have been hounding BCBS since March, received no indication a rate change was in the works, said Carrie Kroll, the Texas Pediatrics Society’s director of advocacy and health policy. With brand-new vaccines, it generally takes no more than three to six months to implement a rate change. Prevnar 13 is not brand new; it’s an updated form of an existing vaccine, Kroll said. And the six-month mark is fast approaching — as is the start of the school year for Texas kids. (The vaccine is mandatory for babies entering daycare.)

“We had doctors saying they were going to stop giving vaccinations, doctors saying they would end their contract with Blue Cross over it,” Kroll said.

Vaccines aren’t like normal medical procedures; doctors purchase them out of pocket on the front end and get reimbursed as they administer them to patients. Though the vaccine has a purchase price — in this case, about $110, with taxes — doctors shoulder indirect costs associated with offering them, from refrigeration systems to syringes to back-up energy supplies. These costs are estimated to be roughly 20 percent of the purchase price.

Every time a new vaccine comes on the market, there’s a lag time as insurers update their fee schedules. With Prevnar 7, released in 2000, BCBS covered both the purchase price plus the administrative costs, pediatricians said. But with Prevnar 13, the provider originally covered just the purchase price — then later added 75 cents in taxes. Despite pointed letters from both the Texas Pediatrics Society and the American Academy of Pediatrics and the fact that the Centers for Disease Control recommended the vaccine as part of its childhood immunization series, doctors said BCBS paid only 2 percent of the purchase price for overhead — until today’s announcement. (The new reimbursement will be $131, BCBS officials said.)

In the meantime, some pediatricians have been asking parents to pay out of pocket for their infants’ vaccines. Others have sent low-income kids to the local public health department for the shots. Still others have thrown in the towel with BCBS, at the cost of losing patients. Terk said about a quarter of his patients are covered by the provider, a proportion that he said wasn’t unusual.

“This really was a situation where we could’ve been saving lives,” Kroll said, “yet the insurer didn’t value it enough to pay for it.”

Texas Tribune donors or members may be quoted or mentioned in our stories, or may be the subject of them. For a complete list of contributors, click here.